Hugh Howey

A few weeks ago, I wrote that there are three big forces driving the future of publishing: scale, verticalization, and atomization.

I was wrong. I had forgotten my own blogpost from last September when I identified another trend that belongs with the first three: “unbundling”. The book business, in the trade segment I follow most closely but in every other segment as well, is seeing its value proposition becoming unbundled in a number of ways.

Up until very recently, a trade publisher controlled just about every aspect of a book’s publication. The indispensible parts of the value publishers offered were two: the advance against royalties that often provided essential financing to enable the writer to create the manuscript and the network of relationships and infrastructure that put books on shelves for consumers to find and buy them.

Because the publisher was taking both a capital and reputational risk with every book published, it was natural that it would handle all the supporting steps: developmental and copy-editing, marketing and publicity, design and manufacturing. The publisher would commission the artwork for the book’s cover and determine what was the best foot forward on flap copy.

Until the turn of the 21st century, it was the exceptional author who had any kind of “platform” that could be employed for the book’s marketing: something like a TV show or newspaper column or fame achieved some other way that could be a springboard for promoting the book. In the cases where those opportunities existed, publishers recognized that the book was being “piggybacked” onto something that had its own commercial purpose and was not subject to the wishes or timetables of a book’s publisher.

What changed before the publishing business changed is that many of us have some sort of platform now, as in “a way to reach an audience”. And, although my platform isn’t comparable to Rush Limbaugh’s or Jay Leno’s, it is, indeed, mine all mine and I can do what I want with it. Many other people have platforms of their own that are far more powerful than mine.

It could be said that publishers themselves began the unbundling process as they got authors to use their platforms to market their books. With the advent of ebooks and driven by the CreateSpace services offered by Amazon, it became possible for any author to publish his or her own book and those with a platform, or even just building one, no longer had to get the assent of a publisher to put their book into the market.

My friend, futurist David Houle (whose new book “Entering the Shift Age” has been published by Sourcebooks), was frustrated in 2007 with his inability to connect with a publisher for his predictive thinking. He was just starting his blog, “Evolution Shift” and it didn’t have enough history or audience to persuade any publisher he found to put out his companion book, “The Shift Age”. So he did it himself, through Amazon, even before there was a Kindle. Over the years, David has sold about 7,000 copies of his book, many through Amazon but many more through his own public appearances as a speaker. (And what he’s made per copy is far more than what he’d have made in a publishing deal.)

Since Houle published “The Shift Age” several years ago, an industry has grown around offering services for publishing. This is referred to as the “author services” business. The core offerings are to take the creator’s file (in Word or InDesign) and make it accessible in various ebook formats at the front end and then to interact with ebook retailers (delivering the file and capturing the sales information and the revenue) at the other end. The services offered by the retailers themselves (and you can get this help from Amazon, Apple, Barnes & Noble, and Kobo) don’t push the ebook out to other ebook retailers. Amazon is the only one to offer a companion print option.

The first mover on these services in the ebook age outside the retailers was Smashwords. They’ve been joined by a host of others. Author Solutions, acquired about a year ago by Penguin, rolled up a number of companies that offered these services in the print-only world that existed before Kindle. They have all come to recognize that publishers provide more than the essential services at each end of the publishing process; they also provide editing and packaging and marketing services in the middle. So these have popped up as discrete offerings — “unbundled” — both through the complete service providers and as stand-alones.

Now there’s an aggregator of the stand-alone service providers, BiblioCrunch, which features a host of freelancers that any author can access. Another fledgling, NetMinds, which has made some news lately by publishing Nolan Bushnell’s book, makes provision of expert services in many categories a part of its model.

This unbundling effect plays out in interesting ways. When Hugh Howey sold the rights to his smash success “Wool” to Random House UK (before he had a US publisher), they worked with Howey and did some editing, including creating an additional chapter, for their edition. Howey took that component of Random House’s work and was able to make it available for the print edition he licensed in the US to Simon & Schuster and then incorporated it into the ebook version he sold himself.

All of this evidence that the publishers’ proposition is being unbundled leads to two strategic observations.

As the services game shifts from “authors” to “entities” (what I call atomization and of which there are new examples just about every single day), there is a critical job description missing from the service offerings. That job is “publisher”. The publisher makes the overall decisions about the editorial, production, and marketing resources that are committed to each book.

In the author services environment, this role can often be useful but would not be missed in many circumstances. There is no “what to publish” decision; the author has a book. There are very limited “resource allocation” decisions because the available resources to allocate are the author’s own.

But as entities of all kind take over from authors as the primary providers of books outside the industry itself, the role of publisher becomes critical. Decisions will need to be made.

There are 26 categories of helper available in BiblioCrunch. “Publisher” is not one of them.

I met last week in Los Angeles with a team of producers and development executives who are acting on an idea I have pushed: that Hollywood can become an important center for fiction book publishing. They have a core resource of thousands of great stories developed in the hopes that they will become a movie that ultimately doesn’t get funded, or as they say out there, “green-lighted”. This team has over 100 projects that are candidates for their book publishing efforts, but they can’t just “do them all”. They have to set up a company, pay to turn scripts into novels (or, at least, narrative stories), and put them into ebook and probably also print book formats. So, they asked me, which ones would you do first?

I said, “I wouldn’t ask me. I’d ask a publisher.” I named two very good and experienced ones immediately who are currently unemployed. These people have vast experience with all the decisions that are required: which stories are most saleable as books, what length the books should be, what style they should be written in, and how they should be titled, packaged, and promoted.

This necessity is even more evident when one thinks about non-fiction entities that might become publishers. If every museum, library, and department of a university is “a publisher waiting to happen” (and I believe all of them are), how could any of them proceed without a publisher?

If you were trying to get a museum started on becoming a book publisher, you’d begin with a discovery process that asked key questions. Who comes to the museum and what do you know about them? Who comes to the museum’s web site and what do you know about them? What IP do you already own that could be publishable as books? What good IP could you lay your hands on if you would publish it as a book? What is your relationship to sources of IP and marketing, like academic institutions, not-for-profits, or other museums? If you asked supporters of your museum for money to fund a publishing program, would they give it to you?

What the publishing program should be in response to the answers to those questions is something only a publisher has real experience figuring out. The publisher is the first service the entity needs. Renting a publisher takes precedence over renting an editor or a cover artist.

Ingram Publisher Services had a great success with a wildly expensive ($625) cookbook series (Modernist Cuisine: The Art and Science of Cooking) created by Nathan Myhrvold, the former Microsoft executive. Perhaps lost in the reporting of that story is the fact that Myhrvold’s first stop was to engage Bruce Harris, the former Publisher of Harmony Books and a former Random House sales executive. Harris has “publisher” in his DNA, and he undoubtedly shaped key decisions, probably including engaging Ingram in the first place, let alone directing their activites, that were instrumental to the success of the project.

So the first strategic point is that hiring all the services without hiring a publisher is like having a football team without a quarterback.

The second strategic observation is that the industry itself, but particularly the trade component of it, is also being unbundled. Disparate efforts that bookstores aggregated and welded together are now coming apart.

Here I’m not thinking about the value chain for each book, which is overseen by the publisher, but the value chain for the industry, which includes the supply chain. Although there have always been some vertical bookstores — in New York City until a few years ago they ranged from specialists in architecture to specialists in mysteries — most books were sold in general bookstores that sold everything. As publishers are forced to reach readers in different ways than they used to, the subject of a book, and the consistency of audience appeal within a publisher’s list, becomes a key to its marketing in ways it never was.

But ebooks are creating another distinction, between books that are meant to be read from start to finish and all other books: art books, illustrated instruction, references, and compendia. Narrative writing, particularly fiction, works as ebooks. The others don’t. That increasingly encourages publishers who depend primarily on narrative reading to stick to it and to not publish books of other kinds.

It is also creating a differentiated distribution problem for publishers, depending on their output. Publishers of novels and narrative non-fiction are seeing the decline in their print book sales compensated for by increases in their ebook sales. They have a new challenge reaching the audiences and making them aware of their books, but their problem isn’t exacerbated by the format change. Many of their readers simply switch over from print to digital on whatever device they want to use and one-color straight text printing enables reducing the print runs without costs getting completely out of line.

But that’s not true for publishers of other books. As bookstores close and readers switch to digital formats, they face existential questions. They can’t suffer the print run reductions readily. They can’t just make a digital version by copying the print. And, if they did, it won’t sell.

Some illustrated book publishers have robust distribution outside the bookstores, to museums or gift shops, for example. In some cases, the book trade was already a diminishing share of their business before the ebook revolution happened.

But the impact of digital change on publishers that used to all depend together on a healthy bookstore network is very highly variable. Their fates were joined. They’re now being unbundled.

Although the organizing theme of our Pub Launch BEA conference is “scale”, the other trends definitely get their moment. Ken Michaels of Hachette will talk about tools his company has developed that are being unbundled and delivered as services to other publishers. And the particular challenge of the illustrated book publishers as they lose the ability to piggyback on bestseller traffic in bookstores is the subject of the final chunk of the day’s programming. First, Ron Martinez of Aerbook will survey the new tools available to make putting an illustrated book into digital form cheaper and more effective. Then a panel of illustrated book publishers — Joseph Craven (Quarto Group), Tim Greco (Dorling Kindersley), Lindy Humphreys (Abrams), and Mary Ann Naples (Rodale) – will talk about how they are adjusting to the new retailing environment unbundling is creating in a panel discussion moderated by former Crown Illustrated publisher Lauren Shakely.

The announcement of what amounts to the first book publishing program spawned by Google demonstrates a paradigm we’re seeing repeatedly. It suggests a sweeping change in publishing from how we’ve known it. The bottom line is that most people employed publishing books perhaps as soon as 10 years from now won’t be working for publishing companies.

The trade publishing business over the past twenty years has been transitioning from what it was for a century. The Internet, which so many of us said two decades ago “changes everything” is ultimately responsible. Amazon.com has been the primary catalyst, with print on demand technology (especially Ingram’s Lightning Source) and ebooks (mostly Amazon, but others too) as supporting players. With so many more books to choose from and really available than there ever were before, the function of gatekeepers, which trade publishers and booksellers clearly and proudly were, becomes an anachronism.

The big question — at least for me — is what is trade publishing transitioning to? What does the trade publishing world look like when it doesn’t primarily reach readers through bookstores anymore, a day which one could say has already come in the past five years.

Overall trade sales today outside of special outlets, catalogs, and what remain of book clubs divide into three big chunks: one is printed books sold in stores, one is printed books sold online, and one is ebooks. The latter two are sold without stores, and far more than half of that is sold by Amazon. And that is the way it is most helpful to think about sales because it is only print-in-stores that requires (or benefits from) a big publishing organization.

What the latest Bowker information has to say, lumping ebooks into “online commerce”, is that 44% of sales are online, 32% through physical retail, and the remainder through book clubs and warehouse clubs (physical retail to me!) and “all other channels”. But they also report that 30% of sales are ebooks, which would mean that they’re only calling 14% of the remaining 70% online. There are a lot of ways to count these things, and the resulting calculation of 20% of print sales being online feels very low to me.

It all depends on what kind of book we’re talking about, of course. I visualize the market breaking into thirds among the three chunks. Certainly, one-third ebooks is an understatement for fiction.

However we view the current division of sales, the trade book business was built in a completely different environment. Indeed, the central proposition that all publishers offered all authors is ” we put books on shelves.” The companion reality was “you can’t do this by yourself”.

As recently as 2007, before Kindle, there were no ebook sales and upwards of 85% of print was sold in stores.

The requirements to deliver on the promise “to put books on shelves” included the capital to invest and specialized knowledge to turn a manuscript into inventory, a physical plant to manage the warehousing and shipping of those books, and a network of relationships with the owners of the shelves (in the bookstores) to get the right to put your books on those shelves. These were the minimum requirements to be a publisher. If you had them, you could move on to being smart about selecting books (in the case of non-fiction, almost always before they were were completely written), being skilled at developing them, being capable of packaging them attractively, and being managers of another network — of reviewers and broadcast conversation producers and, more recently, bloggers and social megaphones — to bring word of them to the public.

All of this together gave a publisher the capability to pay authors advances against what amounts, for all but the very biggest authors, to a minority share of the revenue the book generated. But, in fact, the central proposition has lost its power. Only a quarter to a half of the sales now — far less for fiction and far more for illustrated books — require a publisher to “put books on shelves”. And that number is going down. For the balance, no inventory investment is actually necessary. Nor is a physical plant or a vast network of sales relationships.

And, without that requirement, the barriers to entry to becoming a “book publisher” have collapsed, particularly if you’re willing to start with ebooks and think of print as an ancillary opportunity. Google is becoming one. Amazon became one a long time ago. NBC has become one. The Toronto Star and The New York Times have become ebook publishers. And, of course, so have many tens of thousands of individual authors, a few of whom are achieving startling success.

Soon — in the next 5 or 10 years — every university (perhaps most departments within a university), every law firm and accounting firm and consulting firm, certainly every content creator in other media, as well as most manufacturers and retailers will become book publishers too.

Why not? Without the requirement of an organization to reach the public through bookstores and without the requirements of capital or knowledge to create printed books, any organization that is routinely reaching people interested in a common topic — whether or not they are creating content around that topic now, but especially if they do — will find it constructive to publish, and well within their reach and means to do so.

That is: publishing will become a function of many entities, not a capability reserved to a few insiders who can call themselves an industry. Think about it this way. If you had told every museum and law firm in 1995 that they needed a web page, many would have wondered “what for?” If you had told them in 2005 that they needed a Facebook presence or in 2008 that they needed a Twitter stream, they would have wondered why. We’ve reached the moment when they all need a publishing strategy, and that will be as obvious to all these entities in a year or two as web pages, Facebook pages, and Twitter streams look now.

This is the atomization of publishing, the dispersal of publishing decisions and the origination of published material from far and wide. In a pretty short time, we will see an industry with a completely different profile than it has had for the past couple of hundred years.

Atomization is verticalization taken to a newly conceivable logical extreme. The self-publishing of authors is already affecting the marketplace. But the introduction of self-publishing by entities will be much more disruptive.

Publishing is not immune to the laws of supply and demand and the price of books is tumbling. Most self-published fiction is crap, but a small percentage of a very large number of self-published novels constitutes a significant range of good cheap choices for fiction readers, particularly in genres. That “diamonds in the dirt” effect has been becoming more and more evident with the passage of time. Recently, the Digital Book World bestseller list (compiled by ioByte’s Dan Lubart in conjunction with our friends at DBW) had a self-published book in the top slot for the first time. It won’t be the last time.

Publishers still have plenty of capabilities that are enticing to authors. There are still stores with shelves on which to put books. And big publishers can build on that increased presence very impressively; it is hard to believe that “Fifty Shades of Grey” would have sold the tens of millions of copies that it has as a self-published book. Random House made a quantum difference.

But perhaps we shouldn’t read too much into that. The publishers’ power to use that capability to command a share of the “easy” (no inventory investment or sales force required) money from ebooks, which was a sine qua non for them until very recently, is evaporating.

When Hugh Howey was in the early stages of what has turned into his eye-popping success with the novel WOOL, publishers would only offer him a deal to publish print if he also gave them ebook rights. Howey and his agent, Kristin Nelson, found those offers easy to resist, since he was making so much money on ebooks and publishers would have wanted a healthy share of it. A few months later, Simon & Schuster (wisely, in my opinion) agreed to give Howey a print-only deal for US rights.

How far away can it be for the NBC News book on a national election or the Whole Foods book on cooking the organic way or the Home Depot book on how to build a shelf or the Boston Celtics’ own book on the history of their team to get the same treatment? (Or, of course, the “brand” can handle the whole job themselves, using services offered by many — most prominently Ingram, Perseus, and Random House — to handle the decreasing percentage of the business that is “books in stores.”)

Of course, there is, or at least there can be, a lot more to publishing than just making good content available and making the people you know already aware that it is there. (Although, increasingly, that will be seen as “enough”, along with ancillary benefits, to make it worth the effort to many entities.) There are rights to be sold. There are ways to market to “known book buyers” that are increasingly going to be the property of entities that have developed lists and techniques at scale.

So there will continue to be a trade book business and it is likely that the machinery of the biggest book publishing organization (or two) will be required for a very long time to maximize the biggest commercial potential, like “Fifty Shades of Grey”. But, without a robust “book trade”, from which trade publishing gets its name, there cannot be commercially robust trade publishing, at least not as we have known it.

I reflect on a pithy bit of wisdom offered to me in conversation a few years ago by David Worlock, who might be thought of as one of the originators of digital publishing, and who, in any case, is a wise observer of the publishing scene and by a few years my senior. Well before we thought of any self-published bestsellers — this must have been about 2005 — David said, to me, “surely, in time, the number of books created within the network must exceed the number of books created outside the network.”

The “network”, of course, was the Internet. He was envisioning direct-to-ebook publishing and automated blogs-to-books publishing as well as a lot of customization. He was right.

And the atomization I think may be the overarching trend of the next decade or two fits right in.

Once the concept of the atomization and dispersal of the publishing function becomes understood, you see it everywhere. Aside from the Google-spawned publishing program — which is built around their massive multi-player game activity, but there are many other applications once they get used to this idea — we had a library announce a new digital press last week.

We’d already been putting together a panel of new entrants to book  publishing for our Publishers Launch BEA conference on May 29. Of course, the atomization we talk about here is enabled by the scale being provided by others, including service providers. And the major houses are trying their hardest to build marketing at scale. Ken Michaels, the President and COO of Hachette, and David Nussbaum, the Chair of F+W Media, are our first two confirmed speakers about that. We’ll have a panel of literary agents talking about how they’re tackling the need for scale to help clients with an increasingly broad range of choices for publishing.

Two announcements made in the last two weeks caught our attention.

One was Simon & Schuster’s deal with Author Solutions, creating a new Archway Editions publishing imprint. This was the third such major deal with a publisher for ASI, following similar arrangements forged with romance publisher Harlequin and Christian publisher Thomas Nelson (now owned by HarperCollins).

The other was Publishers Lunch’s deal with Random House, creating the new online bookstore-lite, Bookateria. This was the second such major deal with a heavily-trafficked website for Random House, following a similar arrangement forged with the political site, Politico.

Of the two, the S&S-ASI connection offers less obvious benefits. ASI has apparently built a remarkably efficient engine to get a book delivered from a manuscript. And every publisher has many times more authors knocking at their door than they could possibly consider publishing. And many of them will never find a publisher so would be good candidates for self-publishing services.

But there are both ethical and practical commercial challenges to converting author aspirants who come looking for a deal to customers willing to buy self-publishing services. ASI seems to have persuaded publishers that the conversion works enough of the time to make the connection between publishers and ASI worth making. Let’s remember that the Harlequin and Nelson deals preceded both the acquisition of ASI by Pearson and the deal announced last week with S&S. Presumably, S&S and Pearson knew something about the results from those prior deals and were proceeding with some evidence that using a known publisher as a front door for self-publishers was an idea that works.

On the other hand, neither Nelson nor Harlequin has trumpeted the results of their ASI deal and authors may notice that the legions of successful self-publishers (John Locke, Amanda Hocking, Hugh Howey, Bella Andre, and more than a few others) seems bereft of ASI clients.

There are more questions than answers generated by these deals so far. It appears that the publishers really have nothing to do with their new customers aside from bringing them into the tent. (S&S says in the press release that they’ll be watching the sales of Archway books to see what authors it might want to sign for the house. But isn’t that what every big publisher should be doing across the self-publishing landscape right now?) Will the association with self-publishing damage the core publishing brands? Will the publishers feel some ownership of the self-publishers from whom they profit? Will real synergies develop between the publishers and their ASI connections, or will this remain largely a branding trick?

While all of that remains to be seen, if the ASI-publisher connections deliver revenue to publishers with little or no effort on their part, other publishers will be open to doing the same thing. The question is whether they do.

It is not difficult to discern the value delivered by the collaboration between Publishers Lunch and Random House to deliver Bookateria, a search-and-shopping experience with a Publishers Lunch perspective. It gives Lunch an easy way to deliver real convenience and value to its audience and modestly monetize it at the same time. And it further tests and proves the concept Random House first demonstrated with Politico. By delivering the tech around a pretty complete catalog of available books able to be monetized through affiliate relationships, Random House has created a “product” that any web site with substantial traffic can benefit from in the way Lunch now will.

Publishers Lunch, because it is constantly reporting book news, has more opportunities than the average site to link to purchase pages for a book it is mentioning. It regularly refers to various and sundry lists of award winners and top sellers and it makes nothing but great sense for them to make purchase of these books easy (and make a little money at the same time.)

It may be (and I’m not on the inside of any of these deals; aside from our partnership in Publishers Launch Conferences, Michael Cader of Publishers Lunch runs his businesses and I run mine) that Publishers Lunch is taking a more active role in merchandising books than Politico is. That would make sense. Books are PL’s business, and they have to both be thoughtful and appear thoughtful about how they present them. And since this capability is probably at least as much about providing utility to site visitors as it is about increasing revenue, the merchandising would want to reflect the site’s knowledge and point of view.

I have long believed that book and ebook distribution would ultimately follow the web’s innate tendency to verticalize audiences. Why wouldn’t you buy your political books or sports books or knitting books where you learn about them and be guided more by recommendations of “domain experts” than “book experts”?

I had visualized this verticalization working out from a publisher, which would use its content to attract audiences which it would then monetize many ways, including by selling them books and ebooks of its own and from other publishers. To varying degrees, this is what I saw unfolding with Hay House, F+W Media, Osprey, and Harlequin with the most highly-developed Big House example being Tor Books inside of Macmillan.

Some new propositions — notable among them being the still-promised book retailer Zola and the distributed sales “apps” from Impelsys and Ganxy — were built around the understanding that book curation was most effectively done by the experts and communities functioning in any domain and it made sense to deliver a way for them to enable their own ecommerce for the content they suggested or reported on to their audiences.

But it is in a trade publisher’s DNA to work with aggregators and intermediaries (which is what bookstores, mass merchants, libraries, wholesalers, and special sales outlets are). Random House applied the same vision of distributed and vertical curation but decided that they didn’t need to offer the entire ecommerce solution to execute on it.

So Politico and Publishers Lunch — and, one presumes, more to follow — use Random House to provide their catalog and metadata and some level of curation and they all rely on the existing retail network to complete the transactions and do the fulfillment. Random House and their partners (presumably) share affiliate revenues from the retailers, not the “full margin” on the content sales.

This could be viewed as a bit klunky from the customer’s perspective and it definitely will be for some. You wouldn’t be “shopping” and then “checking out” as two discrete and serial experiences. Each “buy” decision would take you to a retailer choice and then deep-link you to the purchase page for that book at the retailer you choose. Anybody who wants to purchase multiple titles would definitely find this less convenient than just shopping on a retailer’s site.

But if the retailer were delivering the curation and information that Politico or Publishers Lunch is offering in the area of vertical interest, then the customer would probably do their multiple-title shopping at the retailer anyway. The Random House-powered strategy is more opportunistic than that. It’s more about facilitating impulse purchasing than attracting a shopper.

And when you stop and think about it for just a minute, you realize that conversion is likely to be much higher by offering customers a choice of their favorite retailers than it would be if you were signing them up to a new account with a retailer (web site) they hadn’t purchased from before. This is true even in the case of Publishers Lunch, which has credit card numbers for a large number of its most regular visitors because they’re members of Publishers Marketplace. It would be even more of a barrier to making a purchase at Politico and other non-membership sites.

One veteran publishing marketer told me that conversion on clickthroughs to Amazon were very high in his experience, ranging from 8% to 17%. He really doubted whether any fledgling retailer could achieve anything like that rate of conversion.

That constitutes evidence that the revenue achievable as an affiliate could well be higher than what could be gained executing the sales and keeping “full margin”, which brings along with it full responsibility for maintaining an infrastructure and providing customer service. None of that is necessary working as an affiliate.

There is a superficial similarity to these two initiatives. Both involve a company offering tech at scale to help another company monetize its existing network in ways that it doesn’t now. How effective that monetization really will be is still an open question. But it would appear that the ASI service to publishers entirely depends on that: aside from whatever revenue it can yield, there’s no other real benefit to the publisher and, in fact, it could confuse or cheapen the perception of their core business.

The Random House offer to websites, on the other hand, has all sorts of “soft” value. The partnering web site unambiguously offers a service to its site visitors by enabling rapid purchase of relevant content encountered while pursuing their vertical interest. Selling content and earning revenue is only one way to win; they also benefit from more traffic and more stickiness, the inevitable by-products of improving the value being offered any site’s visitors.

What is also interesting to contemplate about the Random House-powered distributed curation is what its potential impact will be on the retail network. Enabling the content purchaser to choose her retailer would, one assumes, distribute the sales from their site in pretty much the same proportions as the market had already.

On the other hand, it might also make it easier for consumers to switch. It could dilute the advantage Amazon has built through their usually superior (compared to other retailers) curation and presentation. It would make it much easier for a supporter of independent bookstores to make the choice to buy from them. (The choices presented are obviously flexible. Politico offers “Politics and Prose” bookstore, an indie based in Washington that specializes in political books. Bookateria instead offers Indiebound, the ABA’s way of sending you to an independent retailer.)

One more observation. There have been two retailers expected to make their appearance anytime now for the last six months: the big publisher-created Bookish and the previously-mentioned Zola Books. The rumors about both of them say that they are having a really hard time making the metadata we have in our industry work well enough to execute on ecommerce. Obviously, Random House had to overcome that same problem to deliver their proposition (although perhaps the bar was a bit lower since they execute sales as an affiliate rather than transacting themselves). An informational page for Bookateria makes it clear that metadata improvement will be an ongoing work-in-progress.

As the other big publishers look at what Random House is doing and wonder if they should be doing the same, they might want to rethink the digital aphorism that anything, once done, can be replicated in half the time and for half the cost. Even if that’s true, starting now to replicate the Random House capability could take a year or more; this is not something that Random House dreamed up last week. In a year, Random House could pick off a number of very desirable large sites and improve their metadata organization even further. I don’t think any competitor who takes this concept seriously will be able to afford to wait for proven success or failure to start developing if they want to be in this game.

NPR did a great job of choosing four minutes of me to sound wise on All Things Considered as part of a publishing roundup. Or you can read a summary of my bit instead of listening to it. We start with the Random House and Penguin merger and meander a bit from there.

This is the last post for the fourth calendar year of The Shatzkin Files. Our annual rhythm is that our quietest week of the year (this one) is followed rapidly by our most intense: the 7-1/2 days of conference programming in four days on the calendar that comprise Digital Book World  2014 and the two Publishers Launch events that bookend it. 

Happy New Year to all my readers, and especially the many of you who take the time to add to the conversation here in the comment string. Double-especially to those of you who dispense your wisdom in concise doses.

Blog posts have been scarcer for the past couple of months because I’ve been so engaged with a major responsibility: putting together what amounts to 7-1/2 days of conference programming that will be presented on four days next month in New York City.

As most readers of this blog probably know, we’re responsible for the programming of the two-day extravaganza that is Digital Book World. DBW 2013 — taking place on January 16 and 17 at the Hilton New York Hotel — will be the fourth iteration of the event, which aims to explore the commercial challenges facing trade publishing in the digital transition. DBW is not about technology per se; it is about the business problems publishers must cope with in an age of technological change.

DBW’s main two days are divided between morning plenary programming — all 1500+ people in one big room — and afternoon breakouts. We’ll have up to five simultaneous breakout sessions in each of three slots each day. So we have what amounts to 4-1/2 days of programming in the breakouts plus one on the main stage.

Because people really do come from all over the world to attend DBW, we were delighted to agree when they asked us at Publishers Launch Conferences (the conference business I own with Michael Cader) to add a show on each side of theirs to build out a week of programming. (The team at DBW itself are also putting together some pre-conference workshops that will run on Tuesday.)

So on Tuesday, January 15, we’ll do our second annual “Children’s Publishing Goes Digital” conference at the McGraw-Hill Auditorium (put together with the invaluable assistance of our Conference Chair and close friend, Lorraine Shanley of Market Partners). And on Friday, January 18, we’re presenting (in conjunction with the DBW team) a new program called “Authors Launch“, a full day of marketing advice for publisher-published authors. (Self-published authors are welcome and will learn a lot, but the program is framed for authors who are working with publishers, not looking for ways to avoid them.)

Programming the “Children’s Publishing Goes Digital” show revealed what we think will be the most important theme in the children’s book space for the next few years: the development of  digital “platforms” that, like subscription offerings (which some, but not all of them, clearly are), will “capture” consumers and make them much less likely to get ebooks and other digital media from outside of it. The list of platform aspirants in this space is long and varied: Storia from Scholastic; RRKidz from Reading Rainbow (the TV show brand); Poptropica from Pearson (which launched Wimpy Kid before it was a book); Magic Town; Disney; Capstone; and Brain Hive. All of them are presenting, as well as NOOK, which, like Amazon Kindle, has announced parental controls on its platform that encourage parents to manage their kids’ reading experience there.

There are other big issues in children’s publishing, particularly the creation of original IP by publishers so they can better exploit the licensing opportunities that follow in the wake of successful kids’ books. We’ll have data presentations from Bowker and from Peter Hildick-Smith of Codex to help our audience understand how kids books are found and selected outside the bookstore in today’s environment.

But we know that the digital discovery and purchase routines will be markedly affected by the platforms as they establish themselves. Publishers are faced with an interesting conundrum. They can’t reach the audiences that are loyal to a platform without going through the platform. But it is the presence of many publishers’ books that strengthens the attraction of the platform and, once it gains critical mass, the value of the content to it (and probably what it will be willing to pay for the content) is reduced. So publishers licensing content to these platforms may be strengthening beasts that will ultimately eat them. I think the roundtable conversation Lorraine and I will lead at the end of the day, which will include publishers Karen Lotz of Candlewick, Barbara Marcus of Random House, and Kate Wilson of Nosy Crow, will have interesting things to say about that paradox.

We’ve developed some “traditions” in the four years we’ve been doing Digital Book World. As we’ve done the past two years, the plenary sessions will open on Tuesday with the “CEOs’ view of the future” panel organized and moderated by David Nussbaum, the CEO of DBW’s owner F+W Media and the man who really dreamed up the idea of this conference. David will be joined this year by Marcus Leaver of Quarto, Karen Lotz of Candlewick, and Gary Gentel of Houghton Mifflin Harcourt. And Michael Cader and I will — as we have every year at DBW — moderate a panel to close the plenaries, “looking back and looking forward” with agent Simon Lipskar of Writers House; Harper’s new Chief Digital Officer, Chantal Restivo-Alessi, and Osprey CEO Rebecca Smart.

Among the presenters on the main stage who will be unlike what our audiences usually hear at a digital publishing conference will be Teddy Goff, the digital director for the Obama campaign, who will talk about targeting and marketing techniques that might serve us well in the publishing world; Ben Evans of Enders Analysis in London, who will tell us how publishing fits into the strategies of the big tech companies (Amazon, Apple, Facebook, Google, and Microsoft) that he tracks regularly*; ex-Macmillan president and now private equity investor Brian Napack, talking with Michael Cader about the investment climate in publishing; and Michael D. Smith, Professor of Information Technology and Marketing from Carnegie-Mellon, talking about a study he and his colleagues have done on the real commercial impact of piracy.

(We’ve also scheduled a breakout session for Teddy Goff so he can talk more about the Obama campaign for those in attendance who want to learn more of its lessons to apply.)

We’re also delighted to have gotten Robert Oeste, Senior Programmer and Analyst from Johns Hopkins University Press, to deliver his wonderfully insightful, entertaining, and informative presentation on XML, the subject so many of us in publishing need to understand better than we do. And we will after he’s done. (We’re also giving Oeste a break-out slot to talk about metadata which I’ll bet a lot of our audience will choose to attend after they’ve heard him on XML.)

Some authors have had remarkable success without help from publishers in the past year, but few or none more than Hugh Howey, the author of “Wool”, who has just signed a groundbreaking print-only deal for the US with Simon & Schuster. His dystopian futurist novel has sold hundreds of thousands of self-published ebook copies and rights all over the world and to Hollywood. We’ll have a chat with Howey about how he did it and we’ll be joined by his agent, Kristin Nelson, for that dialogue. Kristin will stick around to join a panel of other agents (Jay Mandel of William Morris Endeavor, Steve Axelrod, and Jane Dystel from Dystel & Goderich) to talk about “Straddling the Models”: authors who work with publishers but are also doing some things on their own.

We will have several panels addressing the challenges of discovery and discoverability from different angles. One called “Closing the New Book Discovery Gap” teams Patrick Brown of Goodreads with three publishing marketers — Matt Baldacci of Macmillan, Angela Tribelli of HarperCollins, and Rachel Chou of Open Road — and is chaired by Peter Hildick-Smith. That will focus on what publishers can do with metadata and digital marketing to make it more likely their titles will get “found”. Barbara Genco of Library Journal will share data on library patron behaviors and then helm a panel discussion with Baker & Taylor, 3M, Darien Public Library, and Random House exploring the role of libraries in driving book discovery and sales. Another session called “Making Content Searchable, Findable, and Shareable” introduces three new propositions from Matt MacInnis of Inkling, Linda Holliday of Citia, and Patricia Payton of Bowker, along with SEO expert Gary Price of INFODocket. Publishing veteran Neal Goff (who is also the proud father of Obama’s digital director) will moderate that one. MacInnis, Holliday, and Payton offer services that will help publishers improve the search for their books. Price will talk knowledgeably about how the search engines will react to these stimuli.

We’re covering new business model experimentation (with Evan Ratliff of The Atavist, Brendan Cahill of Nature Share, Todd McGarity of Hachette, and Chris Bauerle of Sourcebooks) where publishers discuss ways to generate revenue that are not the old-fashioned ones. We’ll underscore the point that we’re about changes caused by technology rather than being about technology with our “Changing Retail Marketplace” panel, featuring publishers and wholesalers talking about the growth of special sales (through retailers that aren’t bookstores and other non-retail channels).

The future for illustrated books will be discussed by a panel with a big stake in how it goes: John Donatich of Yale University Press, Michael Jacobs of Abrams, Marcus Leaver of Quarto, and JP Leventhal of Black Dog & Leventhal. Two publishers who have invested in Hollywood — Brendan Dineen of Macmillan and Pete Harris of Penguin — will talk about the synergies between publishing and the movies with consultant Swanna McNair of Creative Conduit.

We will have major US publishers and Ingram talking about exports: developments in the export market for books — print and digital. And we’ll have some non-US publishers joining Tina Pohlman of Open Road and Patricia Arancibia of Barnes & Noble talking about imports: non-US publishers using the digital transition to get a foothold in the US market.

One session I think has been needed but never done before is called “Clearing the Path” and it is about eliminating the obstacles to global ebook sales. That one will start with a presentation by Nathan Maharaj and Ashleigh Gardner of Kobo where they will enumerate all the contractual and procedural reasons why ebooks are just not available for sale in markets they could reach. And then Kobo will join a panel conversation with Joe Mangan of Perseus and agent Brian Defiore to talk about why those barriers exist and what might be done in the future to remove them.

Oh, yes, there’s much much more: audience-centric (what I call “vertical”) publishing; the changing role of editors; the evolving author-publisher relationship; and a conversation about the “gamification” of children’s books. David Houle, the futurist and Sourcebook author who wowed the DBW 2012 audience, will return with his Sourcebooks editor, Stephanie Bowen, to discuss their version of “agile” publishing: getting audience feedback to chunks before publishing a whole book.

We will also do some stuff that is more purely “tech”. We have a panel on “Evolving Standards and Formats” discussing the costs and benefits of EPUB3 adoption, which will be moderated by Bill McCoy of IDPF. Our frequent collaborator Ted Hill will lead a discussion about “The New Publishing IT Department”. Bill Kasdorf of Apex will moderate a discussion about “Cross-Platform Challenges and Opportunities” which is about delivering content to new channels.

But purely tech is the exception at Digital Book World, not the rule.

And purely tech won’t show up at all at Authors Launch on Friday, January 18, the day after Digital Book World.

Authors Launch is what we think is the first all-day marketing seminar aimed squarely at authors with a publisher, not authors trying to work without one. It is pretty universally taken as a given that authors can do more than they ever have before to promote themselves and their books and that publishers should expect and encourage them to do that. But, beyond that, there is very little consensus. What should the publisher do and what should the author do? That question is going to be addressed, in many different ways, throughout the day.

The Authors Launch program covers developing an author brand, author involvement and support for their book’s launch, basic information about keyword search and SEO, use of metrics and analysis, a primer on media training, when and how to hire a publicist or other help, and a special session on making the best use of Goodreads. We’ll cover “audience-centric” marketing, teaching authors to think about their “vertical” — their market — and understand it.

The faculty for Authors Launch includes the most talented marketers and publicists helping authors today: Dan Blank, co-authors MJ Rose and Randy Susan Meyers, journalist Porter Anderson, David Wilk, Meryl Moss, Lucinda Blumenfeld, agent Jason Allen Ashlock, and former Random House digital marketer Pete McCarthy.

We have assembled a group of publishers and an agent to discuss how an author should select the best places to invest their time from the staggering array of choices. (Facebook, Twitter, YouTube, Pinterest, etcetera.) That panel will include agent Jennifer Weltz of The Naggar Agency as well as Matt Baldacci of Macmillan, Rachel Chou of Open Road, Rick Joyce of Perseus, and Kate Stark of Penguin. Matt Schwartz, VP, Director of Digital Marketing and Strategy for the Random House Publishing Group, will conduct the session on metrics.

A feature of both our Kids show on Tuesday and the Author show on Friday are opportunities for the audience to interact with the presenters in smaller groups so each person can get his or her own questions answered. At Kids we’ll do that at lunchtime, seating many of our presenters at tables with a sign carrying their name so our attendees can sit with them and engage. At Authors Launch, we’ll be conducting rounds of workshops, crafted so that the authors can get help in their own vertical (genre fiction, literary fiction, topical non-fiction, juvies, and so forth), and on the topics of greatest need for them.

We are sure the week of January 15-18 will prove to be an energizing and stimulating one for all of us living in the book publishing world. We hope you’ll join us.

Digital Book World Week | January 15-18, 2013

Children’s Publishing Goes Digital | Tuesday, January 15, McGraw-Hill Auditorium
DBW Pre-Conference Workshops | Tuesday, January 15, Hilton New York Hotel
Digital Book World Conference + Expo | January 16-17, Hilton New York Hotel
Authors Launch | Friday, January 18, Hilton New York Hotel

When the story of how Amazon came to dominate the consumer book business is written ten years from now, there will need to be a chapter entitled “September 6, 2012″.

Of course, that was the day that Judge Cote approved the settlement agreed to by HarperCollins, Hachette, and Simon & Schuster and began the process of undoing the publisher price-setting regime that was established by the agency model. This is actually designed to unleash broad and deep discounting in the ebook marketplace and I think we’ll see evidence very soon that it will succeed in that objective beyond anybody’s wildest dreams. (I have repeatedly expressed my concerns about what I think are inevitable consequences of that achievement.)

But that’s not all Amazon accomplished on September 6, 2012. It’s not nearly all. In fact, the only thing that wasn’t good for Amazon about the Judge’s announcement was that it stole a lot of the attention from what they can accomplish without the government’s help.

One day after scrappy competitor Kobo tried to upstage them by announcing their own updated suite of devices, Amazon did a combination of outperforming and underpricing the device competition from them, as well as from NOOK, Apple, and Google. Even the device innovation wasn’t what most impressed me. There were several other innovations that raise the bar substantially for everybody competing with the Kindle ecosystem.

1. Leveraging their ownership of Audible, the dominant player in downloadable audiobooks, Amazon has introduced a Whispersync feature that enables seamless switching between reading an ebook and listening to the audiobook version. One of my sisters-in-law, who is both a teacher of reading-challenged kids and an adjunct professor teaching others who do the same, had asked me a few months ago why nobody had done this. I asked around and was told “it is complicated.” Publishers can’t do it because they don’t control the delivery ecosystems. Other ebook retailers can’t do it because they don’t deliver audio.

Only Amazon could do it. Now they have.

1A. In addition to the use of Whispersync to allow seamless toggling between reading and listening, Kindle introduced a feature called “Immersion Reading” that allows you to read and listen at the same time.

Does everybody notice that this creates a real reason to buy both an audiobook and an ebook of the same title? Seems like that is something all authors and publishers can celebrate.

This specific innovation is particularly ironic if we remember some history. In the early days of the Kindle, Amazon wanted to put in a text-to-speech capability that would deliver an audiobook by automation of every ebook. Agents and publishers balked because of the obvious rights issues; audiobooks are a separate profit center for everybody and nobody with a commercial interest wanted to see that threatened, even though others thought that the automated delivery wouldn’t really satisfy an audiobook customer.

Nobody will have a problem with this solution, though. The consumer buys twice.

And, incidentally, somebody else can write a whole blog post on how this suite of capabilities can be used as an opportunity-creator in the college and school markets!

2. Leveraging their ownership of IMDb (the movie and TV database), Amazon is enhancing the experience of watching video by making information about the film and its personnel available at a click. Last month bloggers were explaining that Google bought Frommer’s from Wiley because they wanted to turn content into metadata. Now Amazon is clearly demonstrating exactly why that’s useful and important.

3. Leveraging their publishing capabilities and their role as the only retailer with an audience large enough to deliver a critical mass of readers all by itself, they are introducing serialization by subscription with Kindle Serials. The initial foray is modest: a selection of eight very low-priced serial novels delivered in chunks of at least 10,000 words. But this “tests” the model of getting people to buy something up front knowing in advance that it will come in stages.

(When I explored the viability of subscription models for ebooks, I speculated that the only one that could really pull it off for general reading would be Amazon. Consider the camel’s nose to have now officially penetrated the tent.)

On one hand, this recalls the success of the self-published novellas-cum-novel called “Wool” by Hugh Howey. But it also could be the foundation for something like Dominique Raccah’s “agile publishing” model, which is an active experiment now at her company, Sourcebooks, with author David Houle. Amazon would have the great advantage of a much larger audience to “invite” into an experiment of that kind and, when you are doing something dependent on participation for success, having more people to appeal to at the outset is a huge advantage.

4. Amazon is subsidizing all their devices with ads served as screen savers. They were initially planning to change the previous practice of offering higher pricing that enabled consumers to avoid the advertisements. Their first announcement was that Amazon had gone all in with all their devices coming with advertising and without a “pay more” option to avoid it. Although the initial reaction to this apparently forced a change, and they’re now offering the Kindle Fire without ads for $15 more, this still opens up a series of other thoughts and questions.

How can anybody compete on device pricing with a competitor that not only has the most direct contact with buying-and-paying customers but which is also bringing in ad dollars to subsidize a cheaper retail price?

Does this mean that Amazon “knows” that by far most consumers elected to save the money and don’t care about the ads?

Are they building a priceless communication network to promote content and to charge content creators for the next generation equivalent of store windows and front tables?

I thought Google was the champion of advertising. Why didn’t they figure this out first for the Nexus 7?

5. Amazon’s X-Ray feature, which basically collects core metadata (characters, scenes) from books and movies, is a building block to ultimately deliver summaries and outlines that could be an exciting additional unique capability of the platform. It could perhaps even be a start on generating automation-assisted “Cliffs Notes”-type content that could ultimately command a separate purchase fee.

6. Amazon has built a parental control capability into their Kindle ecosystem called FreeTime so that kids can use the device and even obtain content but only in approved ways. There are fledgling initiatives like Storia from Scholastic and the longstanding PBS brand Reading Rainbow for which one of the core propositions is creating a reading environment for kids with adult controls. These kid-centric platforms are obviously designed to present environments that parents and teachers will find superior to what they use themselves for the purpose of enabling kids’ reading. They suddenly have some serious competition from the most popular platform already out there.

And Amazon has built in what is perhaps a killer app that the others probably can’t even contemplate: they can apparently control the amount of time a kid can spend doing various activities on the device, so parents can mandate a ratio of reading time to movie time to game-playing time. I’m sure more than a few parents will say “wow!” to that.

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Judge Cote’s decision is also very good news for Amazon, and it was what reporters called to talk about on the day of the press conference that announced all of the above. Michael Cader’s very thorough analysis (on which I have written a few more words below) spells out what we don’t yet know about the speed and complexity of implementation, starting with whether an appeal will be heard and whether implementation will be delayed pending that appeal.

But it would seem that the chances are good that many of the controls that prevented Amazon from discounting high-profile books for the past 18 months will come off a month, or maybe two months, before Christmas.

I think that Amazon will discount aggressively. Their “brand” is, among other things, very much about “low prices for the consumer”. And they have always used price as a tool to build market share. Expect them to lead the way.

The price-setting won’t be done by humans; it will be done by bots and algorithms, responding to what is happening in the marketplace among their competitors every day. Amazon is very good at this; they’ve been doing it for years. Presumably, BN.com has a similar set of skills and tools. Presumably everybody except Apple had to price at least their wholesale-purchased books competitively.

Apple was protected by the MFNs that remain in place for all but the settling publishers. But without that protection, how will Apple compete? They’ve never had to do competitive pricing of commodity products before. I will be very impressed if Apple can get through the price fights about to take place without an obvious black eye. They haven’t been training for this.

Overall, this should mean another surge of growth in the ebook market, which had seen a serious dropoff in its growth rate over the past year. We won’t be seeing ebooks doubling share annually again, but we’re about to see digital priced aggressively in ways that will make any regular consumer of print wonder whether they should consider making the shift that so many heavy readers have already made.

When the settlement is implemented, the three settling publishers will have their book prices cut by retailers, whatever they decide about setting list prices and however they negotiate the next round of commercial terms. But the three publishers still permitted to use agency pricing — Random House and the continuing litigants Macmillan and Penguin — will probably find that they are forced to lower the prices they set to keep their big books competitive. At least that would be my expectation. It will be beyond interesting to see how this plays out over the next few months.

Pardon a plug here for my Publishers Launch Conferences partner, Michael Cader, and his skills as the indispensible reporter on the publishing scene. His four posts on Friday: on the Judge’s ruling, on what happens next as a result, on their new hardware, and on the various reading and consumption features that were the subject of most of this post, comprised — by far — the clearest and most thorough explanation of a staggering array of complex information. Of course, Michael is more than a reporter on the industry; he’s been a player in it for 25 years.

I really don’t understand how reporters who don’t have the benefit of that background can justify not reading him. (You hit a pay wall it takes $20 a month to scale if you are not a subscriber. Just about everybody making a living in trade publishing has no trouble with the value proposition.) They’d all certainly be doing their jobs better if they did.

The Wall Street Journal ran a piece last week about what the ebook retailers know about how we are all reading. In fact, all the ebook retailers who manage ecosystems that include apps for using their platform on multi-function devices can see every move their consumers make. We all have the sense that they know something on a per-customer basis because they recommend what we should read next when we visit or through emails they send (and even that gives some consumers the heebie-jeebies). The piece focused on the analysis of aggregated data way beyond just purchases to understand the interaction between many readers and books.

Much of what was cited in the article would be intuitively assumed. Readers of fiction tend to finish the books more often than readers of non-fiction and to read them more continuously. Readers of genre fiction tend to read the books faster. Readers of literary fiction tend to have more than one book going at a time.

This kind of stuff, in my opinion, actually doesn’t help a publisher or a retailer much more than sales data at the ISBN level already can. Barnes & Noble reports launching Nook Snaps (shorter books) for non-fiction, it is implied in the piece, because they observed that readers often quit non-fiction books before they’ve completed them. But there’s already plenty of data in all retailers’ databases about the performance of shorter works. Kobo started as “Shortcovers”, thinking they’d be the pioneers of shorter stuff. There are independent efforts to publish shorter books like Byliner and The Atavist.

And, of course, there are Amazon Singles. Research by Laura Owen at paidContent points to some robust successes there, with over 2 million Singles sold in a year and at least a handful of authors making some pretty decent money from them. In other words, anybody monitoring the sales of shorter works or cheaper works can draw their own conclusions about how they sell without regard to data about the consumption patterns for longer books.

But the Journal piece did suggest one kind of data that is extremely worth noting: when consumers show heightened interest in a particular author (by reading that author’s book faster and with fewer interruptions than others) or declining interest (by reading more slowly or abandonment before completion) in one that has had prior success.

It isn’t actually the retailer that is most in need of that data; it is the publishers who will bid on the next book by the author who most need to know that.

And that brings us to the crux of the matter which is mentioned, but only lightly touched upon, in the story: only Amazon (so far) is really both a retailer and a publisher.

This has been on my radar screen for a long time. It was several conferences ago — well over a year — that I asked Michael Tamblyn of Kobo to talk about “what retailers know that publishers would want to know” about ebook consumption. Kobo, which works hard to promote its publisher-friendliness and willingness to share data, readily took up that challenge.

Then last Fall I was counseling a purveyor of ebook sales data about how a service that I thought would be of value to publishers. “Aggregate the usage stats from the ebook retailers.”

“Why would they give them to me?” he asked.

“Because, if they’re smart,” I said, “they won’t want Amazon to be the only publisher who knows what retailers know. Books Amazon signs up might well be lost to them for sale; they want publishers to keep signing up all the important books. To the extent that this data can only be used by a publisher and they aren’t using it, they’re well served if the data is used well by publishers who look to them for distribution.:”

Then, as the Journal story reported, Jim Hilt of Barnes & Noble excited our audience at Digital Book World last January by promising that B&N would share data with publishers going forward. I took that as confirmation of my judgment about smart retailers. There have been false starts on that promise since then, but the Journal article says that B&N is now sharing analytics data with publishers.

Hilt cites the case of a series where interest from the readers seems to be flagging and suggests it might be a hint that publishers should juice it up, perhaps by adding a video. Of course, he has the analytics data and I don’t, but I wonder if that’s the right reaction. Do videos get clicked on and viewed? Would they add interest or create a distraction?

I’d suggest there are three responses more likely to be valuable. The pretty obvious one is to lower the price of the ebooks. (Surely the retailers’ analytical capabilities would show the efficacy of that pretty clearly.) I suspect one thing retailers see more clearly than publishers is the price-banding of their customer base. To the extent that’s true, you can revive a tired backlist title by introducing it to a “new audience”, those who buy in a price-band and don’t consider books above it.

Another would be to change the configuration of the offer, such as putting three (or more) books together for a special bundled price. That would gain some attention for the “event” value of a new edition, as well as presenting a price-offer.

And the last, totally in the hands of the publisher, would be to offer the author advances based on a lower sales forecast going forward or to stop publishing him or her at all.

What would be of even more interest to a publisher, and almost certainly something that Amazon has set to be flagged for their publishing arm, is when a less-known author or book is being read very avidly. That would signal an opportunity for a publisher — one the author herself wouldn’t know about, even if she checks her sales figures and ranks regularly.

One conjecture that would seem to be worth confirming is that ebooks make continuous series, or multiple ISBNs that form a reasonably seamless and continuous story, more commercially attractive than in the days of print. The Journal story opens with B&N’s observation that the first thing most readers of the first book in The Hunger Games series do when they finish it is to order the next one. And, of course, they can start reading it right away.

We already know that ebooks are lifting genre fiction over literary fiction and all fiction over non-fiction in relation to print. If the series is lifted by comparison to the print-in-store past, it would suggest some changes in the creative output (novels that leave plenty of hooks for successor books rather than ones that neatly resolve all the loose ends) and dealmaking (publishers wanting stronger option clauses and, perhaps, more multi-book deals even for first-time authors.)

Successes like the self-published “Wool” by Hugh Howey might be instructive. We spent some time learning about it last week in conversation with Howey’s agent, Kristin Nelson, as background for our Publishers Launch Hollywood conference on October 22 (at which we’re hoping that Howey will appear). “Wool” is a novel compiled from five novellas. Howey and Nelson have publisher deals in place in 10 markets including the UK and Brazil (with sales in Germany and Russia imminent) and the movie rights have been sold to 20th Century Fox. But Howey is doing so well with his self-publishing ebook sales (and a handful of print sales through Amazon’s CreateSpace) that he has so far turned down six-figure offers from US publishing houses.

Howey introduced what is now his phenomenon as a single novella on Amazon without particularly high expectations. A combination of reader reaction and Amazon’s response to it, promoting him in various ways, led to Howey writing further installments as novellas. Eventually, five of them were collected into an “omnibus”, which is the novel “Wool”.

I suspect that some good analytics at Amazon led to the promotion which contributed to Howey’s success, which he has extended to other ebook platforms. I also suspect that at some future time Amazon will adjust their tactics so they give their publishing arm a crack at an author like Howey before they promote him into stardom.

It is worth noting that during the time that Howey’s writing, his readers, and Amazon’s marketers were combining to create what might be a new commercially giant mega-saga, he wasn’t publishing on the Nook or Apple or Kobo platforms. Only after he proved that “Wool” was actually a sensation, did he even bother to make his work available through the other retailers.

I think I might find a lesson or two in that if I worked for any of Kindle’s competitors.

Now Howey is working on his next two novels, which will also be issued as a series of novellas before they are collected. He’s no secret to anybody anymore.

I’m involved in two events this month about very different topics that will both profoundly change publishing.

I’m speaking at George Washington University at their 5th Annual Conference on Ethics and Publishing on July 9 about the danger to the publishing industry posed by the DOJ’s suit and the settlement agreement apparently about to be ratified by the Court. 

And on July 26, we’ll hold our “Publishing in the Cloud” conference at Baruch in Manhattan. We see “hosted software” as a key tool for publishers to cut their overheads and pre-production costs (as they will have to) by almost unimaginable percentages in the next few years. Our conference is the first dedicated to this topic for publishing and we’ll be hearing from publishers large (Hachette, HarperCollins, Perseus, Random House, Washington Post, Wiley) and not-nearly-so-large (David C. Cook, Liberty Fund, Wayne State University Press, Workman) about how they’re employing these new capabilities. A great roster of sponsors will not present from the stage, but our  ”speed-dating” and “expert session” format will enable all attendees to get their very specific questions answered both by the people they’ll hear present and from many of the suppliers who provided them the capabilities they will have talked about.

 

I spent an enlightening few days in Los Angeles last week doing some networking and research ahead of our “Movie/TV-to-book” conference, which will take place on October 22 in Hollywood. The premise of our event is that “everybody in Hollywood needs an ebook strategy” and it was definitely encouraging to have had that idea endorsed by every person I talked to.

We got help with introductions to the local community from our friends at the Intellectual Property Group, an agency. Larry Becsey, who has the corner office there, is an old friend of mine. I was introduced to Larry in the early 1970s by Harry Sloan, who had been a classmate at UCLA. Harry went on to a very successful career that included being head of Filmways and MGM Studios.  At the time Becsey and I met, Harry was Ron Howard’s lawyer and Larry was Ron Howard’s agent.I don’t think I’ve seen Harry since but Larry and I have stayed friends for four decades.

So Larry and his partner, agent Joel Gotler, made a few calls and circulated my blogpost on this subject to a few friends and the meetings I had materialized as a result of their efforts. Here are some examples of what I learned through these conversations about the new mutual opportunities for Hollywood to connect with the publishing world.

There are two entities I spoke with that are off the track a little bit for the Hollywood conference but which have serious marketing propositions for the publishing community.

The Baby-First Network, in the words of its founder, Guy Oranim, was visualized as a combination between Baby Einstein and Sesame Street. I admit I would never have imagined that a TV network for infants would make any sense, but they’re gaining audience steadily and, as they knew they would, have the moms watching along with their wee ones.

That is opening up some fabulous marketing opportunities which they’re going to exploit by making their prime-time programming parenting-centric, rather than infant-centric. Baby-First already did a multiple-book deal for infant books with Readers Digest; I think they’ll both be able to publish parenting and collaborate with one or more publishers who do, delivering unique new market reach that any book publisher would love to have.

The other marketing discovery for publishers was from Insight Entertainment where Matt Lesher, with whom I met, has collaborated with former MTV anchor Adam Curry on an author-interview program. They do it once or twice a week, primarily distributed through iOS and Android apps. Curry’s based in Austin and he does the interviews by Skype from wherever the author is. Lesher reports to me that they count sales of between 750 and 7500 copies of every book they cover. They know because their business model is to get paid with the referral income; of course there are other sales they generate but can’t see or count.

Do publishers know about this yet? Not so much, reports Lesher. I don’t know whether this works for our Hollywood conference, but it surely is something to put on stage at Digital Book World! (And any publisher who wants to can go ahead and pitch an author now: send a note to [email protected])

Part of the payoff for going to LA for these meetings was becoming aware of things going in what is already our business that hadn’t registered with me. I met with lawyer Wayne Alexander, who with Kassie Evashevsky at UTA represents the movie/TV interests for author Hugh Howey. Howey has a string of successful futurist novella which due to reader demand was expanded via several installments into a long novel under the general label of “Wool”. (Five installments have been assembled into a single novel: the “Wool” omnibus edition.)

Howey is doing so well selling his ebooks through ebook stores that even very big deals brought in by his agent, Denver-based Kristin Nelson, couldn’t entice him to trade in his self-publishing career for all that a big US publisher could offer. Meanwhile, his team has sold his book in the UK and Brazil the movie rights to 20th Century Fox. I found this story interesting on many levels, including that fans of a novella could encourage extending the story to full-length.

I don’t know what Howey had working for him besides the strength of his story (I’m trying to find out) but his commercial tale will definitely interest Hollywood because it proves that something can become a success through ebooks alone. One thing that distinguishes Hollywood-originated “self-publishing” stories from all others, probably including Howey’s, is that everybody who might publish in Hollywood has five friends who, among them, have half-a-million Twitter followers. He got his ball rolling, but imagine how much easier it would be for a Hollywood entity to do that.

Another publishing-centric discovery I made last week was the Hollywood development arm of Penguin, run by Pete Harris. Called the Penguin Development Group, it is an in-house team assigned to identify and generate originals ideas and opportunities for books and series to be published in imprints across the house. Penguin expects many of the books from this source will be developed commercially into feature films, original television and video games.

When I was (successfully) recruiting Peter Gethers, the head of Random House Studio, for the Hollywood conference, he talked about their recent movie-based-on-their-book, “One Day.” According to Peter, the movie was moderately successful financially, but the book sales skyrocketed (in Germany and the US, where they were Random House, Inc. publications) bringing the company substantial profits. And, as he points out, they’ve also established an author who will produce other successful books for them in the future.

I spoke to trans-media producer Zak Kadison both before I went out there and after I got back. Zak is a big believer in the value of self-publishing. He is developing a project with multiple components and was deep into a publishing deal for it when the major house he was negotiating with started to demand contract terms he couldn’t live with. He walked away, confident that he can self-publish the book he wants out to spearhead the project even if he doesn’t succeed in engaging another publisher. Of course, he’d like the big advance and the clout of a big house, but only if the tradeoffs aren’t onerous. Self-publishing is an acceptable alternative.

A central point to the conference is to show Hollywood what becomes possible in a digital book world that wasn’t possible before. I found a very unusual example of that in a meeting with Trond Knutsen of L.A. Theatre Works. L.A. Theatre Works produces audios of plays with a very unusual model. They “stage” performances (with scripts, without sets or costumes) of plays which is repeated five times in front of an audience of about 300 people. Then they edit the recording and deliver the output as a show on public radio, a podcast, and an audiobook.

Because of their 25-year reputation for quality, they get professional actors to do these readings for compensation they’d find unacceptable anywhere else. (Recently, they had Calista Flockhart in their version of Romeo and Juliet.)

When I met with Trond, I asked him “why not put the audio together with the script as an enhanced ebook.” Turns out that’s exactly their intention. They have already launched a series of these for plays for which rights either weren’t an issue or were a resolvable one (several plays by Shakespeare, Importance of Being Earnest, She Stoops to Conquer). In other cases, they’ve worked with a summary of the scenes rather than the scripts (The Crucible).

I told Trond I loved this as an example of what could be done: they’ve leveraged their core competency (producing these audios). It turns out there’s another reason for L.A. Theatre Works to be on our program. Trond believes that same core competency can be leveraged on behalf of other ebook producers who might have scripts they want to present with audio themselves. They now do about 10 of these productions a year, but they could do 20 or even 30 if there were “call” to do so. That makes them an even better presentation for our audience because they’re not just showing “what can be done” but offering a resource to help others do it.

Part of why I went to LA and had all these conversations was to learn how Hollywood thinks about these issues and how I should frame them so that our potential audience will know what we’re talking about. I got two great suggestions in that regard.

One is to say “now everybody can pursue an Alloy Entertainment strategy.” Alloy is the bi-coastal media company (The Vampire Diaries, Gossip Girl, Sisterhood of the Traveling Pants) that packages books to get projects rolling as a core strategy. Alloy sells them to publishers, which requires proprietary expertise and contacts that are not broadly distributed. But the core concept of establishing a project as a book so the IP can be controlled for movies, TV, or games is one they’re identified with that everybody in Hollywood understands.

The other phrase I was instructed to use was “development Hell”. That describes the projects that have made the rounds and show no signs of getting made (or “greenlighted”, in Hollywood jargon.) These can be in various stages of development — treatment or screenplay, optioned or even bought — but, from the producer’s point of view, they look like write-offs at the moment.

Projects in development Hell could well be rescucitated by being novelized and launched as a book. All of these projects are stories that a producer once fervently believed in and invested in. Often that won’t have changed. A book could provide a new path to success. And, as publishing is now, a book can be developed and launched for what in Hollywood terms is a minimal incremental investment.

Hollywood is a town full of creative people. They have stories; they have writers with time on their hands; and they have more local people who can reach the public on a per-capita basis than anyplace else on earth. Once the creative executives there wrap their minds around the opportunities offered by digital publishing, I think we’ll see many bestsellers coming from them.

Tony Schulte, one of the kindest and most decent people I ever met during my life in publishing, died this past weekend at the age of 82. When I met Tony he was second in command at Random House. That followed his long stint at Simon & Schuster and preceded his time as a banker, consultant, and executive recruiter. He had been in the business for about 60 years and he kept meeting people until the very end. Everybody who knew him will feel some pain at his passing. Somebody’s going to have to find a pretty large hall to accommodate all of us who will want to attend his memorial, which it is said will take place in September. It is safe to say that Tony’s friends-to-enemies ratio would put him in the Hall of Fame. It approached infinity.